You Must to Know 10 Income Tax Rules

1. Tax saving on house rent allowance

House rent allowance, commonly
known as HRA, is a major chunk of a salaried individual's total pay.
Under Section 10 (13A) of the Income Tax Act, you can save tax on the
rent you pay to your landlord. However, you get partial tax benefit on
the rent you pay. The amount that is allowed for exemption under HRA is
calculated as the minimum of:i) Rent paid annually minus 10 per cent of basic salary plus dearness allowance
ii) Actual HRA received
iii) 40 per cent of basic and dearness allowance (50 per cent in case of metro cities).

Your
HRA allowance will be taxable if you are not paying any rent or you
stay in your own house. But those who stay with their parents can also
claim HRA benefits by paying rent to their parents.

2. Deductions under Section 80C

One can claim tax benefit on
investments up to Rs 1.5 lakh under Section 80C of the Income Tax Act.
If you fall in the highest tax slab (30 per cent), by investing Rs 1.5
lakh you can save tax for up to Rs 46,350 (including cess charges.) per
year. Investments that qualify for tax benefit under this section are
Employees' Provident Fund (EPF), Public Provident Fund (PPF), Sukanya
Samriddhi Account, National Savings Certificate and tax-saving fixed
deposits. The premium paid for life insurance plans, National Pension
Scheme (NPS) and tax-saving mutual funds (ELSS) also qualify for
deduction under Section 80C.

One can also claim tuition fees
paid for up to two children, principal repayment on home loan, stamp
duty and registration cost on the house bought as a deduction under
Section 80C.

Read: Save income tax through mutual fund investment. All you need to know

3. Deductions under Section 80CCD(1B)

This section was introduced in
Budget 2015-16. Under this section, one can get tax benefits on
investments up to Rs 50,000 in NPS tier 1 account. This is over and
above the Rs 1.5 lakh limit under Section 80C. An individual in highest
tax bracket can save Rs. 15,450 by investing Rs. 50,000 in NPS under
Section 80CCD(1B).

4. Deduction under Section 80E

If you have taken an education
loan for yourself, spouse or children, then the interest paid on the
loan qualify for tax benefit under Section 80E. The best thing here is
that there is no upper limit on the amount of deduction. But the
criteria is that the loan must have been taken from a financial
institution or approved charitable institution and for full-time higher
education.

5. Deduction of interest on housing loan (Section 24B)

If you have taken a housing loan
to buy a house, then the interest you pay on your housing loan qualify
for tax benefit under Section 24B. Interest paid up to Rs 2 lakh in a
financial year on housing loan is allowed as deduction from your income.
If you have taken a home improvement loan, then interest up to Rs
30,000 will be allowed as deduction under this section.

6. Deduction under Section 80EE

Re-introduced in Union Budget
2016, an additional deduction of Rs. 50,000 is available under this
section, which is over and above the limit of Section 24B on interest
paid on home loans if a person is buying a house for the first time. But
there is a condition to avail this benefit. The cost of the property
must be below Rs 50 lakh and the loan amount must be less than equal to
Rs 35 lakh.Also, the property must be bought after April 1, 2016.

7. Deduction under Section 80D

Premiums paid for health
insurance for self, spouse, children, and parents qualify for deduction
under Section 80D. One can claim deduction of Rs. 25,000, if he is below
60 years of age, and Rs. 30,000 if he is above 60 years of age, towards
medical insurance premium paid for self, spouse and children. Under
this section, additional deduction of Rs. 25,000 is available if one
buys medical insurance for his parents. This deduction can go up to Rs.
30,000 per year if parents are above the age of 60 years. So the total
deduction you get under Section 80D is up to Rs 60,000.

8. Deduction under Section 80DD

If a tax payer has dependent
parents, spouse, children or siblings who are differently-abled, then he
can claim deductions up to Rs. 75,000 for expenses on their maintenance
and medical treatment under this section. If the disability is severe
in nature, then the deduction can increase to Rs 1.25 lakh.

9. Deduction under Section 80DDB

Under this section, one can claim
deduction of Rs. 40,000 for medical treatment of specified disease or
ailment for self and dependents. The deduction can go up to Rs. 60,000
if the tax payer is above 60 years of age and if he is above 80 years of
age, then the deduction amount is up to Rs. 80,000. The diseases have
been specified in Rule 11DD. To claim this benefit a certificate in form
10 I is to be furnished by the taxpayer from any registered doctor.

Also Read: Mutual fund: Should you opt for regular plan or direct plan for wealth creation

10. Tax benefit under Section 80TTA

Under this section, interest
income up to Rs 10,000 per annum from savings account is allowed as
deduction from taxable income. However, interest earned from fixed
deposits, term deposits does not qualify for deduction under this